Strategic Themes

Strategic Themes are differentiating business objectives that connect a portfolio to the strategy of the Enterprise. They provide business context for decision-making and serve as inputs to the Vision, budget, and backlogs for the Portfolio, Large Solution, and Program Levels.

The primary purpose of strategic themes is to drive portfolio innovation and differentiation.

Details

Strategic themes don’t need to restate the obvious, as most elements of a portfolio vision are understood. That is, Portfolio stakeholders know quite well what the portfolio is for, and they establish and manage their mission and vision. Instead, strategic themes provide the enterprise with the differentiators to move from the current state to a more desirable, future state. They help drive innovation and competitive differentiation achievable only through effective portfolio Solutions.

Can you list ten things to get done in your portfolio that are important? But when push comes to shove, what are the three (or five) most important of these? Strategic themes provide the business objectives that highlight changes to the enterprise strategy affecting a particular solution portfolio. They are a significant communication mechanism between the enterprise and its solution portfolios, as Figure 1 illustrates.

Formulating Strategic Themes

Strategic themes are an output of a collaborative process in which the enterprise’s executives and fiduciaries work with portfolio stakeholders to analyze a set of inputs before arriving at conclusions, as illustrated in Figure 2.

Value Streams Budgets

Strategic themes profoundly influence value stream budgets, which provide the investment and allocation of people needed to accomplish the strategic intent. Keep the following questions in mind when making those decisions:

Do the current investments in value streams reflect the changes to the existing business context?

Are we investing the appropriate amounts in new products and services? Are the capabilities of current products and services sufficient or is more investment warranted? Are maintenance and support activities sufficiently funded?

What are other adjustments required based on the new themes?

Portfolio Backlog

Strategic themes provide decision-making filters in the Portfolio Kanban system that influence the portfolio backlog. They:

Impact the identification, success criteria, and prioritization of Epics in the funnel and backlog states

Warrant consideration and discussion in the Lean business case (see the epics article)

May impact splitting and implementing epics

Vision and Priorities

Strategic themes influence the ART and Solution Train vision and roadmap and help determine the attributes of Weighted Shortest Job First (WSJF) prioritization for items in the Program and Solution Backlogs. Solution and program epics that flow from the portfolio, or arise locally, are also influenced by the current themes. Moreover, strategic themes provide vital conceptual alignment between the trains. Due to their importance, they will often be presented by the Business Owners during Program Increment (PI) Planning.

Economic Framework

Finally, because they can affect any major element—including development cycle time, product cost, product value, development expense, and risk—strategic themes may have a significant impact on the economic framework.

Measuring Progress against Strategic Themes

Identifying desired business outcomes for strategic themes can establish a context for assessing progress toward the strategic intent. However, many desirable measures of intent are trailing indicators. Success factors, such as Return on Investment (ROI) and new markets penetrated, can take a long time to achieve.

Instead, the organization needs fast feedback from early indicators, many of which are not financial metrics. Lean organizations apply innovation accounting to address this challenge [1]. Innovation accounting is a thoughtful look at which early indicators are likely to produce the desired long-term results. It includes implementing the tooling, functionality, testing, or other mechanisms to collect that data.

Also, certain success criteria can be based on investment or activity. For example, an online retail store might want to reach a younger demographic. In this case, the success criteria could be a mix of investments, activities, and early indicators. A first learning Milestone might be to test the hypothesis of whether extending online capabilities to mobile platforms would appeal to that target audience. This could be measured easily with feedback from focus groups or analysis of mobile traffic data. From there a second step might be to increase the budget for the mobile teams. To start trending the data an epic Minimum Viable Product (MVP) could also be employed to capture the age of users across all purchasing points.

Strategic theme outcome criteria provide indicators that allow the portfolio to understand the solutions involved, validate technical and business hypotheses, and, where necessary, pivot toward a better solution. The PI cadence offers an excellent timebox for experimenting with new approaches and gathering the feedback needed to show that investments in new strategic themes are likely to produce the desired long-term results.